SWITZERLAND – The SFr12bn pension fund of the city of Zurich (Pensionskasse der Stadt Zurich – PKZ) for municipal employees, looks set to gain independent status from the Zurich City Council early next year, paving the way for more freedom in its investment dealings.

Armin Braun, head of investments at PKZ, which has around 23,000 active members and 13,000 pensioners, says the fund is subject to certain political restrictions due to its status as legal entity within the city administration.
“ It is a separate account because you must have this under Swiss law on pension plans, but we are seeking another legal form.
“ We should like to do this and the council of the city of Zurich has decided to do it also, but it will necessitate a decision of the parliament and the electorate of the city.
“ Parliament will probably decide this during this year and we hope that a vote will be next year, although we are not quite sure because we have the elections of the government and the parliament in spring of next year, so maybe time is a bit tight.”

Braun says a yes vote would change the fund into a public endowment, which would be a separate legal entity from the council.
“ There would a close relationship between the city and the foundation but with separate councils, “ he adds.

Braun says the fund has just appointed an investment manager for a passively managed foreign currency mandate, but that for political reasons the manager cannot be named.
He notes that while the recent tender process for the fund is now finished, talks on the fund’s strategy will re-start in the coming months.